From Connectivity to Use: An Innovation-Conversion Model of

Digital Finance Across Developing Economies

Serkan Yilmaz Kandir1,* Murat Ismet Haseki2

1 Faculty of Economics and Administrative Sciences, Adana, Turkey

2 Faculty of Economics and Administrative Sciences, Cukurova University, Adana, Turkey

Received: January 07, 2026 Revised: February 28, 2026 Accepted: May 13, 2026 ⋆ Corresponding author

ABSTRACT

Digital connectivity has grown more rapidly than people’s engagement with formal digital finance, creating a policy

gap beyond mere device, account and network coverage. This article proposes an innovation-conversion framework

to approximate the effectiveness of the enabling conditions to be translated into digital-payment usage. Six crosssections

are set up as non-competing predictive specifications, repeated cross-validation, out-of-fold benchmarking,

regional stress tests and unsupervised archetype mapping to analyse a harmonized 2024 cross-section of 74 low and

middle-income economies. The top performing Elastic Net specification achieved a mean cross-validated R2 of 0.867,

an out-of-fold R2 of 0.881, and a mean absolute error of 5.23 percentage points. The signal from account ownership

was the predominant one, with additional information coming from mobile internet access, self-reported exposure

to internet fraud, and internet-skill constraints. The proposed conversion-gap index defines the economies where

the actual use of payments significantly under- or over-performs what is expected given the enabling environment.

The positive converters were Mongolia, the Republic of Congo, Lesotho and Venezuela, while the largest negative

gaps were in India, Ethiopia, Nepal, Sri Lanka and the West Bank and Gaza. Mature digital-use systems, use

lagging access-rich systems, mobile-led transitions and foundational access gaps are four structural archetypes that

further distinguish the mature systems. The findings change the perception of financial innovation as a conversion

issue: infrastructure is important, but institutional onboarding, accessible accounts, building of trust, security, and

capabilities will be the keys to making connectivity a commonplace financial transaction.

Keywords: Digital financial inclusion Financial innovation Digital payments Connectivity Global Findex

Explainable prediction Emerging economies

1. INTRODUCTION

The expression of inclusion has been changed.The meaning

of inclusion has changed in practice. They can have a smartphone,

be online regularly, and have an account with money

without using a digital interface, without paying for it, or

without any need for an account. This leaves a gap between

technical availability and sustainable financial use that is consequential

for banks, payment companies, regulators, and

governments. Application of investment in connectivity and

account opening can lead to poor usage when products are

hard to navigate, consumers don’t trust digital channels, there

is salient exposure to fraud, or account design doesn’t align

with recurring transactions.

Recent research has established facts of fast expansion of

digital finance, differential uptake and differential impacts on

welfare. While digital channels can generate cost savings and

reach, they rely on the capacity, design and consumer pro-